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Exhibit 1
June 14, 1999
Mr. Xxxx-Xxxx Espalioux
Chairman of the Management Board and CEO
Accor
Tour Maine Montparnasse 00 xxxxxx xx Xxxxx
00000 Xxxxx Cedex 15 France
CONFIDENTIALITY AGREEMENT
Dear Sirs:
In connection with your continued possible interest in a transaction (the
"Transaction") involving, Red Roof Inns, Inc. (the "Company") and in order to
confirm, extend and otherwise supplement our Letter Agreement dated March 5,
1998, you have requested that we or our representatives furnish you or your
representatives with certain information relating to the Company or the
Transaction. All such written information furnished on or after the date hereof
by us or our directors, officers, employees, affiliates, representatives
(including, without limitation, financial advisors, attorneys and accountants)
or agents (collectively, "our Representatives") to you or your directors,
officers, employees, affiliates (including Motel 6), representatives (including,
without limitation, financial advisors, attorneys and accountants) or agents or
your potential sources of financing for the Transaction (collectively, "your
Representatives") and all analyses, compilations, forecasts, studies or other
documents prepared by you or your Representatives in connection with your or
their review of, or your interest in, the Transaction which contain or reflect
any such information is hereinafter referred to as the "Information". The term
Information will not, however, include information which (i) is or becomes
publicly available other than as a result of a disclosure by you or your
Representatives or (ii) is or becomes available to you on a nonconfidential
basis from a source (other than us or our Representatives) which, to the best of
your knowledge after due inquiry, is not prohibited from disclosing such
information to you by a legal, contractual or fiduciary obligation to us.
Accordingly, you hereby agree that:
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1. You and your Representatives (i) will keep the Information confidential
and will not (except as required by applicable law, regulation or legal
process, and only after compliance with paragraph 3 below), without our
prior written consent, disclose any Information in any manner
whatsoever, (ii) will not use the information in any way detrimental to
the Company, and (iii) will not use any Information other than in
connection with the Transaction; provided, however, that you may reveal
the Information to your Representatives (a) who need to know the
Information for the purpose of evaluating the Transaction, (b) who are
informed by you of the confidential nature of the Information and (c)
who agree to act in accordance with the terms of this letter agreement.
You will cause your Representatives to observe the terms of this letter
agreement, and you will be responsible for any breach of this letter
agreement by any of your Representatives.
2. You and your Representatives will not (except as required by
applicable law, regulation or legal process, and only after compliance
with paragraph 3 below), without our prior written consent, disclose
to any person the fact the Information exists or has been made
available, that you are considering the Transaction or any other
transaction involving the Company, or that discussions or negotiations
are taking or have taken place concerning the Transaction or involving
the Company or any term, condition or other fact relating to the
Transaction or such discussions or negotiations, including, without
limitation, the status thereof. The Company and its Representatives
will not (except as required by applicable law, regulation or legal
process) disclose to any person the fact that discussions or
negotiations are taking place or have taken place with Accor
concerning the Transaction.
3. In the event that you or any of your Representatives are requested
pursuant to, or acquired by, applicable law, regulation or legal
process to disclose any of the Information, you will notify us promptly
so that we may seek a protective order or other appropriate remedy or,
in our sole discretion, waive compliance with the terms of this letter
agreement. In the event that no such protective order or other remedy
is obtained, or that the Company does not waive compliance with the
terms of this letter agreement, you will furnish only that portion of
the Information which you are advised by your counsel is legally
required and will exercise all reasonable efforts to obtain reliable
assurance that confidential treatment will be accorded the Information.
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4. If you determine not to proceed with the Transaction, you will promptly
inform our Representative, Xxxxxx Xxxxxxx & Co. Incorporated ("Xxxxxx
Xxxxxxx"), of that decision and, in that case, and at any time upon the
written request of the Company or any of our Representatives, you will
either (i) promptly destroy all copies of the written Information in your
or your Representatives' possession and confirm such destruction to us in
writing, or (ii) promptly deliver to the Company at your own expense all
copies of the written Information in your or your Representatives'
possession; except that you may retain, subject to your continuing
obligations under this letter agreement, written information that does not
contain or make reference to Information provided by the Company and was
developed by you and your representatives for purposes of your own
analysis and internal review.
5. You acknowledge that neither we, nor Xxxxxx Xxxxxxx or its affiliates, nor
our other Representatives, nor any of our or their respective officers,
directors, employees, agents or controlling persons within the meaning of
Section 20 of the Securities and Exchange Act of 1934, as amended, makes
any express or implied representation or warranty as to the accuracy or
completeness of the Information, and you agree that no such person will
have any liability relating to the Information or for any errors therein
or omissions therefrom unless and to the extent provided for in an
executed definitive transaction agreement. You further agree that you are
not entitled to rely on the accuracy or completeness of the Information
and that you will be entitled to rely solely on such representations and
warranties as may be included in any definitive agreement with respect to
the Transaction, subject to such limitations and restrictions as may be
contained therein.
6. You are aware, and you will advise your Representatives who are informed
of the matters that are the subject of this letter agreement, of the
restrictions imposed by the United States securities laws on the purchase
or sale of securities by any person who has received material, non-public
information from the issuer of such securities and on the communication of
such information to any other person when it is reasonably foreseeable
that such other person is likely to purchase or sell such securities in
reliance upon such information.
7. As of the date of this letter agreement, Accor does not beneficially own
any securities entitled to be voted generally in the election of directors
of the Company or any direct or indirect options or other rights to
acquire any such
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securities. You agree that, for a period of one year from the date of this
letter agreement, neither you nor any of your affiliates will, without the
prior written consent of the Company or its Board of Directors: (i)
acquire, offer to acquire, or agree to acquire, directly or indirectly, by
purchase or otherwise, any voting securities or direct or indirect rights
to acquire any voting securities of the Company or any subsidiary thereof
or of any successor to or person in Control of the Company, or any assets
of the Company or any subsidiary or division thereof, or of any such
successor or controlling person; (ii) make, or in any way participate in,
directly or indirectly, any "solicitation" of "proxies" (as such terms are
used in the rules of the Securities Exchange Commission) to vote, or seek
to advise or influence any person or entity with respect to the voting of,
any voting securities of the Company; (iii) make any public announcement
with respect to, or submit a proposal for, or offer of (with or without
conditions) any extraordinary transaction involving the Company or its
securities or assets; (iv) form, join or in any way participate in a
"group" (as defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended) in connection with any of the foregoing; or (v) request
the Company or any of our Representatives, directly or indirectly, to amend
or waive any provision of this paragraph. You will promptly advise the
Company of any inquiry or proposal made to you with respect to any of the
foregoing.
8. You agree that, for a period of one year from the date of this letter
agreement, you will not, directly or indirectly, actively solicit for
employment or hire any management employee of the Company or any of its
subsidiaries with whom you have had contact or who became known to you in
connection with your consideration of the Transaction; provided, however,
that the foregoing provision will not prevent you from employing any such
person who contacts you on his or her own initiative without any direct or
indirect solicitation by or encouragement from you.
9. You agree that all (i) communications regarding the Transaction, (ii)
requests for additional information, facility tours or management
meetings, and (iii) discussions or questions regarding procedures with
respect to the Transaction, will be first submitted or directed to Xxxxxx
Xxxxxxx and not to the Company. You acknowledge and agree that (a) we and
our Representatives are free to conduct the process leading up to a
possible Transaction as we and our Representatives, in our sole
discretion, determine (including, without limitation, by negotiating with
any prospective buyer and entering into a prelimi-
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nary or definitive agreement without prior notice to you or any other
person), (b) we reserve the right, in our sole discretion, to change the
procedures relating to our consideration of the Transaction at any time
without prior notice to you or any other person, to reject any and all
proposals made by you or any of your Representatives with regard to the
Transaction, and to terminate discussions and negotiations with you at any
time and for any reason, and (c) unless and until a written definitive
agreement concerning the Transaction has been executed, neither we nor any
of our Representatives will have any liability to you with respect to the
Transaction, whether by virtue of this letter agreement, any other written
or oral expression with respect to the Transaction or otherwise.
10. You acknowledge that remedies at law may be inadequate to protect us
against any actual or threatened breach of this letter agreement by you or
by your Representatives, and, without prejudice to any other rights and
remedies otherwise available to us, you agree to the granting of injunctive
relief in our favor. In the event of litigation relating to this letter
agreement, if a court of competent jurisdiction determines in a final,
nonappealable order that this letter agreement has been breached by you or
by your Representatives, then you will reimburse the Company for its costs
and expenses (including, without limitation, legal fees and expenses)
incurred in connection with all such litigation.
11. You agree that no failure or delay by us in exercising any right, power or
privilege hereunder will operate as a waiver thereof, nor will any single
or partial exercise thereof preclude any other or further exercise thereof
or the exercise of any right, power or privilege hereunder.
12. This letter agreement will be governed by and construed in accordance with
the laws of the State of Ohio applicable to contracts between residents of
that State and executed in and to be performed in that State.
13. The confidentiality provisions contained in paragraphs 1(j) and 2 above
shall terminate on the earlier of the date of execution of a definitive
transaction agreement or two years from the date hereof.
14. This letter agreement contains the entire agreement between you and us
concerning confidentiality of the Information, and no modification of this
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letter agreement or waiver of the terms and conditions hereof will be
binding upon you or us, unless approved in writing by each of you and us.
Please confirm your agreement with the foregoing by signing and returning to
the undersigned the duplicate copy of this letter enclosed herewith.
Very truly yours,
Red Roof Inns, Inc.
By: /s/ XXXXXXX X. XXXX
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Name: Xxxxxxx X. Xxxx
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Title: Chairman, President and
Chief Executive Officer
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Accepted and Agreed as of the date
first written above:
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Accor
By: /s/ XXXX-XXXX EPALLOUX
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Name: Xxxx-Xxxx Epalloux
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Title:
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